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The Bankruptcy Files: Plenty of Restructuring Work to Go Around

Posted by Brian Baxter

Mega-bankruptcies might
have tapered off from their peak of a year ago, but there are still
plenty of high-stakes out-of-court restructurings keeping lawyers busy.

Hilton Worldwide, the operator of the Hilton hotel chain owned by private equity firm The Blackstone Group, on Friday announced the successful restructuring of all its existing debt. The
arrangement with creditors reduces Hilton's total debt load by $4 billion
through the repurchase of $1.8 billion in debt and the conversion of another $2.1
billion of junior mezzanine debt into preferred equity.

Hilton is hardly alone in its efforts to reorganize its massive debt obligations out of court. The New York Post
reports that Clear Channel Communications, the largest radio company in the
country, faces an uncertain future if it doesn't manage to successfully restructure its
debt over the next few years.

There's good reason to question whether it will do so. Clear Channel's private equity owners, Bain Capital and Thomas H. Lee Partners, and creditors broke off debt negotiations in
December. No discussions on reducing the company's $18.4
billion debt load have taken place since then, the Post reports. Clear Channel was the target of a
drawn-out buyout battle two years ago that finally ended after several big
banks financing the deal settled litigation with Bain and
THL over the terms of the transaction.

Some of Clear Channel's creditors
are hoping the company will collapse so they can pick up pieces of the San
Antonio-based radio giant, according to The Post. Sources familiar with the Clear Channel deal, which involved many lawyers from several firms, tell The Am Law Daily that the debt discussions haven't yet involved outside lawyers. Who's likely to get the work when they do?

Ropes & Gray advised both Bain and THL on their
acquisition of Clear Channel. We contacted David Chapin, the lead Ropes partner advising on the Clear Channel deal, to ask if the firm has been involved in the debt restructuring talks, but Chapin did not return our call.

While corporate bankruptcy filings might not be keeping up with last year's record pace, they haven't dried up. Here are some that have come across our radar in recent days (attorneys' hourly billing rates are listed in parentheses, when available):

PALI HOLDINGS

The parent company of Pali Capital, the ailing
broker-dealer and investment banking boutique earmarked for dissolution, has been forced into bankruptcy. Reuters reports that Pali Holdings filed for Chapter 11 on April Fools' Day after being unable to find a buyer for the firm
that once had $200 million in annual revenue.

Pali Holdings listed a mere $716,300 in assets against
roughly $31.8 million in debts, Bloomberg reports, noting that the company
received $3 million in "emergency bridge financing" last November. It has lost almost $40 million over the past two years. The day before its bankruptcy
filing, according to Bloomberg, JPMorgan Chase filed suit against Pali in state
court in New York, seeking $4.5 million over an alleged loan default.

Mark Indelicato, a bankruptcy partner with New York's
Hahn & Hessen, is serving as debtor's counsel. Court records show that the
firm has been paid a $150,000 retainer.

Gems TV does exactly what you might expect--sell jewelry
on TV. Struggling to remain profitable and service its debt obligations, the Reno-based company filed for bankruptcy in Delaware on April 5,
Reuters reports.

Robert Brady, chair of the bankruptcy and corporate
restructuring practice at Delaware's Young Conaway Stargatt & Taylor, is
serving as local debtor's counsel along with associates Kenneth Enos and Robert
Poppiti, Jr.

The rising price of gold has hurt Gems TV's bottom line,
Reuters reports, as has a civil suit against the company filed by DirecTV seeking $25 million in
damages over the alleged breach of an affiliation agreement. DirecTV also appears on a list of Gems TV's largest creditors--it is owed
more than $2.6 million for "broadcast fees."

Rock & Republic has obtained $7.5 million in
debtor-in-possession financing from CIT Group, which recently took its own dip
in Chapter 11. Reuters reports that Geoffrey Lurie, who previously headed a
turnaround at The North Face, has been hired as Rock & Republic's new chief
restructuring officer.

DERRICK COLEMAN

As an unabashed sports fan and Syracuse alum, The Am Law Daily would be
remiss if we didn't include the Chapter 7 filing by former basketball star
Derrick Coleman. The Wall Street Journal reported late last week that Coleman, a standout at
Syracuse 20 years ago, filed for bankruptcy on March 2 in Detroit.

Coleman becomes the latest talented former NBA
star--following the likes of Kenny Anderson and Antoine Walker--to run into
financial trouble despite the millions he earned as a pro with four different NBA teams. Coleman listed nearly $4.7 million in debt against $1 million in remaining assets.

One of Coleman's bankruptcy lawyers, Mark Berke of Michigan's
Gold Lange & Majoros, told The WSJ that his client's desire to invest in
his hometown of Detroit contributed to the ex-basketball star's financial
troubles. Several local ventures are listed on Coleman's bankruptcy
filing. Coleman even owes $50,000 to current Detroit mayor and former
Syracuse basketball star Dave Bing.